How do I create NPC animations?

The only difference between NPCs and players is that instead of loading the animation into the Humanoid, you load it into an AnimationController. You can insert it with the basic objects window, or via a script.

local id = 00000 --Change to your anim id
local animation = Instance.new("Animation")
animation.AnimationId = id
local controller = Instance.new("AnimationController")
local animTrack = animController:LoadAnimation(animation)
animTrack:Play()

That's pretty much it. Of course, I did not add parents and other details. I just gave you the basic logic and methods.

Here's the wiki article.